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What is Apple’s Real Plan?

Jerry Lucky Commentary May 2015

Copyright Jerry Lucky © 2015 All Rights Reserved

 

With the recent news reported in The Financial Times that streaming music services such as Spotify have eclipsed CD sales and are closing in on digital downloads as the largest source of revenue in the United States, is it any wonder that we see the name Apple showing up in the news.

 

I will freely admit I’ve never been a big fan of the company known as Apple. I refuse to use iTunes, I don’t use an iPhone and I have no need of the iPad in my life let alone a iWatch that by their own advertising seems to be little more than a fitness gauge of some sort. Now, there have been times in my career where I’ve had the opportunity to work on both Apple and Microsoft systems, but I I gotta tell ya…Apple has never won me over. Some have criticized Apple, going so far as calling them “Techno-Nazis” for the uniformity and tight-fistedness they dictate when it comes to their software. Others have poo-pooed their product line as being nothing more than status symbols for the masses. And still others have taken aim at the lemming-mania that surrounds their new product launches calling their fans sheep. But none of this is what motivates my dislike of the tech giant, although there may be a grain of truth in each of those observations. No, for me it tends to be the sense of entitlement I see that seems to permeate the very core of the company. By their own admission they’ve never asked what their customer wants, they’ve always just built it and then told them it was good.

 

With that in mind, here’s a few of the more recent headlines that caught my eye:

 

·        Why Apple Wants Beats Electronics: Android Users

·         Apple Doesn't Want to Compete — It Wants to Own the Record Business

 

Perhaps a little explanation is due regarding each of these headlines. The first one is really a lead up or precursor to my main point but relevant none the less because it sets the tone.

 

The latest stats show that the number one smartphone software platform in the world is Android. I’m sure this is a frequent topic of discussion at Apple HQ. So in their march to “global domination” should we be surprised that Apple sees a problem with this? Their solution is to buy Beats Electronics. Why else would Apple pay $3.2 Billion for a company that not six months previous had been valued at just $1 Billion. When world domination is at stake no price is too high it seems. The strange thing is, I’m pretty sure Apple’s tech geniuses could have come up with a better sounding in house system so why go outside the company. Simple, by buying Beats, Apple manages to attach it’s sticky fingers to Android users who subscribe to the Beats Streaming service (who by the way shown they have no love for Apple) without them even knowing. With this acquisition Apple picks up a well branded streaming service and headphone company that gives them access to millions of Android users. Now all of this goes on pretty much behind the scenes so it will be interesting to see what happens when all those Android users suddenly find out “Big Brother Apple” is looking over their shoulders. I mean after-all its OK when the one looking over your shoulder is someone you like…it’s another thing entirely when it’s someone you’re not too keen on.

 

The second headline is the one that really caught my eye and got me thinking about this stuff. The article in The Hollywood Reporter described a pre-Grammy party at Clive Davis’s place where all the senior Apple execs (Tim Cook included) were being treated like royalty and there was much glad-handing and picture taking by most of the high-level major and indie record folks. Based on the article the cup of obsequiousness was truly overflowing as many of the record execs got have a one on one with the Team Apple. Interestingly before each sit-down session, parties were asked to sign nondisclosure statements so my “spidey-sense” tells me there was something brewing that’s for sure.

 

Now the previous article I referred to talked about Apple securing control of the Beats streaming service for Android users, however the second article alludes to that not being quite enough. No, the second article says that Apple has its sights set on something more than just streaming. The article quotes an industry insider as saying, Apple has no intention of competing with other services like Spotify, rather Apple’s plan is to BE the music business. And they demonstrate proof of this saying that Apple currently has 800 million credit cards on file compared to Spotify’s 15 million subscriptions. There’s a whole lot more in the article including how Apple intends to “clean up” the iTunes store getting rid of thousands of titles, titles that you won’t have access to anymore. And that, ladies and gentlemen is what I mean by control.

 

Given the polarizing nature of the companies mentioned I’m sure there will be some out there who will point a finger at me and ask if I’d feel the same way if it was, say, Microsoft doing all this fancy maneuvering to secure control of an industry and rest assured my response would be “hell, yeah!” The fact that the company is Apple however should be no surprise.

 

If you’ve read any of my rants, you’ll know that one of the things I dislike about the music industry is the concept of “Control” - that the “Boss” can exert on the artist. We’ve seen too many times over the years where this arrangement has worked out well for the “Boss” and usually not that well for the artists. Quite frankly I don’t care if that “Boss” is a record company or computer company; the idea of maneuvering to control an artistic industry is something I find more than a little distasteful.

 

At least that’s what I think.

 

Jerry Lucky

(5/1/15)